GDP should include sex and drugs

The European Commission wants France to include illegal or undeclared activities like prostitution and sales of drugs

2 June 2014
By

FRANCE should be including the market for prostitution and illegal drugs in its gross domestic product, the European Commission says.

Commission statistics body Eurostat is recommending that certain illegal activities which generate wealth be included, at estimated amounts, in countries’ GDP, a call which is so far being refused by national statistics body Insee.

The logic is to create a level playing field, since some countries already include such activities, such as the Netherlands. There, cannabis is on sale legally and sales of other drugs are estimated based on street prices and estimates of the number of users. Prostitution is legal and prostitutes declare their incomes for tax – though their expenses, such as condoms, clothes and transport are deducted by the statisticians, who just include the profit they make.

In France recreational drugs are illegal and prostitution is a grey area - the activity is not strictly illegal but “soliciting” as well as pimping or running a brothel are (a law under debate calls for soliciting to be legal, but for clients to be penalised). While some prostitutes declare for tax, under various job descriptions, much of the work is “on the black”.

Eurostat advises that states include in their GDP activities that, while they may not be legal, involve consenting parties.

The Senate’s finance committee chairman Philippe Marini has stated that Insee is being “inappropriately prudish” about including estimates of these activities. He said “the financial image of France is at stake”.

Italy is reportedly looking at taking account of illegal activities, which it is estimated could increase its GDP 10%. A higher GDP may mean a country having to make a larger contribution to the European budget, however it would also reduce the ratio of debt to GDP, a factor which Brussels monitors as an indicator of countries’ economic health.

Financial newspaper Les Echos said Insee is considering sending a revised GDP estimate for last year to Eurostat, including the data asked for, but without making it public.

Part of its reasons for being reticent is that it is not clear that the transactions are all done with full consent, the paper says. Insee already includes in its data estimates of other kinds of undeclared work and the market for smuggled tobacco.

Photo: Fred/www.fotolia.com

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